We investigate an assortment of claims about the 2017 tax bill and its provisions.
This is a developing story.
In the early morning hours of 2 December 2017, the Senate passed a sweeping tax bill that had been edited in private by Republican legislators and included hand-written notes in the margins. The secretive and controversial nature of the bill generated a significant amount of questions and confusion, as did the House’s draft version of the bill — which still must be reconciled with the Senate version before it becomes law. The Senate published the almost 500-page text of the bill, officially titled the Tax Cuts and Jobs Act, on 5 December.
Its controversial nature was illustrated by the dueling hashtags #taxreform and #TaxScamBill, and, as is often the case in scenarios involving a deep partisan divide, the late-night passage of the bill and social media debate about it led to a number of rumors, Facebook forwards, and other claims of sometimes questionable veracity. Here are some of those questions, answered:
The House version of the bill would entirely eliminate personal casualty loss deductions for uninsured losses from natural disasters, while the Senate version would allow them, but only in cases of “federally declared disasters.” The change would not take effect until 2018, however, which means victims of the 2017 California wildfires would still be able to deduct qualified losses.
The version of the Tax Cuts and Jobs Act introduced in the House did strike down existing law that exempts tuition waivers from taxable income. However, the final version of the bill passed by the Senate removes this provision entirely, leaving graduate school tuition waivers untaxed.
While the bill does not mention Medicare specifically, critics said that the consequences of its passing would trigger cuts that would curtail patients’ access to health care and eliminate medical deductions they would normally count on while seeking treatment, hitting cancer patients especially hard. But Republican leadership insists that they would safeguard the program if the bill passes.
The Tax Cuts and Jobs Act would remove the exemption for some employee fringe benefits, like reimbursements that employees get from their companies when they move for a job. However, employee discounts, where employees get discounts on products or services sold by their employer, remain untaxed income both in the draft versions and the bill the Senate passed on 2 December.
Both the House and Senate version of the 2017 GOP tax bill include legislation that allows unborn children to be listed as beneficiaries on 529 college tuition savings accounts, a move many have described attempt to create a legal precedent for fetal personhood. The draft bills did not make explicit the goal of creating a legal precedent for fetal personhood, but implicitly did so through otherwise unnecessary regulation. However, that provision was dropped from the version of the bill passed by the Senate on 2 December, but is still in the House version of the bill as of 5 December.
The Senate version of the 2017 GOP tax plan, but not the House version, included a provision codifying what had previously been a legally uncertain question in the tax code — whether the companies that maintain and staff private jets on behalf of a plane’s private owner must collect a ticket tax when owners or other passengers use the plane.
The provision makes it clear they are not subject to this tax. While not literally a tax cut or deduction explicitly given to private-jet owners, it has the effect of reducing the tax burden of private-jet passengers relative to the commercial airline flying public.
Despite Internet rumors to the contrary, the bill would not eliminate business expense deductions for self-employed people and small business owners. It would, however, do away with itemized deductions of work-related expenses by employees.
The draft House version of the tax bill contains a provision repealing the federal law (known as the Johnson Amendment) that bars religious institutions from endorsing political campaigns or candidates. However, that provision does not appear in the Senate version of the bill.
Does the tax plan double the child tax credit from $1,000 to $2,000?
The House version of the tax overhaul plan calls for increasing the maximum child tax credit from $1,000 to $1,600 per child; the Senate version would increase it to $2,000 per child. These changes would disproportionately benefit higher-income families, however, because the child tax credit is only “partially refundable” and limited to no more than 15 percent of a family’s earnings over $3,000. According to the Center on Budget and Policy Priorities (CBPP), the poorest American children only qualify for a very small child tax credit, if any at all.
Does the tax plan double the standard deduction for individuals and married couples?
The bill increases the standard deduction from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples — a key component of the legislation, and one often touted by President Trump and Republican leaders in Congress.
However, while some people stand to benefit, it won’t be a windfall for everyone because other deductions would be done away with — the personal exemptions for individual taxpayers and qualifying dependents ($4,050 per person), for example. The Los Angeles Times published an analysis of the tax bill’s give-and-take surrounding the standard deduction.
Is there a provision in the tax bill allowing oil drilling in Alaska’s arctic wildlife preserve?
A proposal on page 461 of the 466-page Senate version of the Tax Cuts and Jobs Act would, in fact, “establish and administer a competitive oil and gas program” at the northernmost tip of the Arctic National Wildlife Refuge on Alaska’s North Slope. Environmental groups strongly objected to the provision, which has no evident connection to tax reform.
Would the tax bill increase taxes on 87 million families?
The sources citing this figure — including The Atlantic and The Center for American Progress — calculated it using a spreadsheet prepared by the Tax Policy Center, a nonpartisan think tank associated with The Brookings Institution. The Tax Policy Center based the spreadsheet on their analysis of major provisions in the Senate bill.
However, the statement doesn’t represent the whole story. Stated more exactly, 87 million households with incomes under $200,000 a year will see their tax burdens increase by 2027. Adding in taxpayers at the highest income levels, that number swells to just short of 94 million (50.3 percent of taxpayers) who will experience a tax increase by 2027. However, that’s principally because the bill stipulates that the tax cuts on individuals will expire after 2025.
Will the tax plan add $1 trillion to the federal deficit?
According to projections by Congress’s own Joint Committee on Taxation, the Tax Cut and Jobs Act (specifically, the Senate version) would indeed add more than $1 trillion in deficits over the next 10 years — even after economic growth is taken into account. This would mean, among other things, that substantial spending cuts would be required to keep the deficit under control. The estimate may change after the House and Senate bills have been reconciled into a single piece of legislation.